Child Tax Credit increased and new credit for other dependents in 2019

The IRS has made some favorable changes to the Child Tax Credit for 2019 and simplified a credit for other dependents as adult children and your elderly parents.

CHILD TAX CREDIT INCREASED TO BENEFIT HIGHER INCOME TAXPAYERS

The IRS has increased the AGI phaseout for the child tax credit to benefit higher income taxpayers. For single taxpayers,the credit begins to phase out at $200,000 of MAGI (modified adjusted gross income) This is a big change from the $75,000 MAGI phaseout from years past.

For married filing joint taxpayers, the MAGI phaseout begins at $400,000. This is also a big change from the $110,000 phaseout from years past.

I’ve talked about phaseout last week, but to reiterate, that just means that once you hit that MAGI threshold of $200,000 (single) or $400,000 (married filing joint), your child tax credit will be reduced.

AMOUNT OF CREDIT PER CHILD INCREASED

The amount of credit per child has also increased from $1,000 to $2,000 per child. The credit applies to children 17 years and younger. The taxpayer must claim the child as a dependent and the child must live with the taxpayer for more than six months of the year. The child must also have a valid Social Security Number issued before the due date of the tax return, including extensions.
NOTE: That the law changed here and requires the child to have a SSN, not a TIN. So, it appears taxpayers that have TIN’s for their children will now need a SSN to get the credit.

OTHER DEPENDENTS

For children over 17 that the taxpayer claims as a dependent or other relatives such as an elderly parent, the IRS allows a deduction of up to $500 per dependent. This simplifies, but also limits the deduction for other dependents.